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Posts Tagged ‘Delaware’

While my colleagues are stuck in the cold of Washington for inauguration week, I’m enjoying a few days in the Caribbean. More specifically, I’m sharing my views today on Trump and the global economy at the annual Business Outlook Conference in the British Virgin Islands.

Yes, another example of the sacrifices I make in the battle for liberty.

But it’s fortuitous that I’m here for reasons other than the weather. This is a good opportunity to expose Oxfam. Many people have a vague impression that this group is a well-meaning charity that seeks to help lift up poor people.

If you take a close look at the organization’s activities, however, you’ll see that it’s become a left-wing pressure group.

Consider, for example, Oxfam’s recent report on “Tax Battles,” which discusses the supposed “dangerous global race to the bottom on corporate tax.”

Based on Oxfam’s ideologically driven agenda, Bermuda and the Cayman Islands are the worst of the worst, followed by the Netherlands, Switzerland, and Singapore. The British Virgin Islands, meanwhile, is number 15 on Oxfam’s list.

And what awful sins did BVI and the other jurisdictions commit to get on the list?

Well, the report suggests that their guilty of helping taxpayers minimize their tax burdens.

To create the list, Oxfam researchers assessed countries against a set of criteria that measured the extent to which countries used three types of harmful tax policies: corporate tax rates, the tax incentives offered, and lack of cooperation with international efforts against tax avoidance.

In other words, places with good business tax policy are ostensibly bad because politicians have less money to waste.

By the way, the folks at Oxfam are grotesquely hypocritical.

The world’s most important jurisdiction for corporate tax planning is Delaware and it didn’t even appear on the list. Why? I have no idea.

But I can tell you that there is a single building in Delaware that is home to 285,000 companies according to a report in the New York Times.

1209 North Orange Street… It’s a humdrum office building, a low-slung affair with a faded awning and a view of a parking garage. Hardly worth a second glance. If a first one. But behind its doors is one of the most remarkable corporate collections in the world: 1209 North Orange, you see, is the legal address of no fewer than 285,000 separate businesses. Its occupants, on paper, include giants like American Airlines, Apple, Bank of America, Berkshire Hathaway, Cargill, Coca-Cola, Ford, General Electric, Google, JPMorgan Chase, and Wal-Mart. These companies do business across the nation and around the world. Here at 1209 North Orange, they simply have a dropbox. …Big corporations, small-time businesses, rogues, scoundrels and worse — all have turned up at Delaware addresses in hopes of minimizing taxes, skirting regulations, plying friendly courts or, when needed, covering their tracks. …It’s easy to set up shell companies here, no questions asked.

Most leftists get upset about Delaware, just like they get upset about BVI and the Cayman Islands.

But Oxfam’s people are either spectacularly clueless or they made some sort of bizarre political calculation to give America a free pass.

For purposes of today’s discussion, however, what matters most is that Oxfam is ideologically hostile to jurisdictions with good policy. The fact that they’re also hypocritical is just icing on the cake.

By the way, putting out shoddy reports is a pattern for the organization.

It recently got a lot of press attention because of a report on “An Economy for the 99 Percent” with the dramatic claim that the world’s 8-richest people have the same wealth as the world’s bottom-50 percent.

Oxfam wants people to somehow conclude that billions of people are poor because those 8 people are rich. But that’s nonsense.

My colleague Johan Norberg has waged a one-man campaign to debunk Oxfam’s shoddy methodology and dishonest implications.

Here are two very clever tweets on the topic.

Amen. Ethical people want to reduce poverty. Envious people want to punish the successful.

And here’s a tweet noting that the classical liberal policies opposed by Oxfam have led to a much better world.

And here’s one of his “Dead Wrong” videos on the topic of inequality and poverty.

And since we’re looking at videos, here’s my video on Obama’s anti-tax haven demagoguery.

You’ll notice that 1209 North Orange Street makes a cameo appearance.

The moral of the story is that BVI (and other so-called tax havens) should be applauded, not criticized.

And Oxfam should end the pretense of being a charity. It’s a left-wing hack organization.

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I think it is very nice when left-wing groups help make the case for pro-market policies A recent example is a report from the Center for International Policy, which wants to demonize so-called tax havens, but their report shows that the United States is actually the biggest beneficiary of tax haven policies, with more than $2 trillion of non-resident deposits in American financial institutions (the Cayman Islands is in second place, with $1.55 trillion of deposits compared to $2.18 trillion in the U.S.). This augments a report from another left-wing group, which found that Delaware is the world’s best tax haven. In other words, America’s tax haven policies (sadly, only available to non-resident aliens) are enormously beneficial to U.S. financial markets, which means capital that boosts investment and job creation. It’s also worth noting that even non-U.S. tax havens benefit the American economy. As this Treasury Department chart illustrates, Caribbean banking centers have about $2 trillion invested in the U.S. economy. The left-wing groups would like to destroy tax competition and set up a global tax cartel, sort of an “OPEC for politicians,” but the numbers they report underscore how important it is for American policymakers to preserve the open flow of capital and why tax havens are great news for the U.S. economy. Which is exactly what we argued in our video on the Economic Case for Tax Havens.

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Tax competition is an issue that arouses passion on both sides of the debate. Libertarians and other free-market advocates welcome tax competition as a way of restraining the greed of politicians. Governments have lowered tax rates in recent decades, for instance, because politicians are afraid that the geese that lay the golden eggs can fly across the border. But collectivists despise tax competition – for exactly the same reason. They want investors, entrepreneurs, and companies to passively serve as free vending machines, dispensing never-ending piles of money for politicians. So when a left-wing group puts together a ranking of the world’s “top secrecy jurisdictions” in hopes of undermining tax competition, proponents of individual freedom can use that list as a guide to world’s most investor-friendly nations. The good news is that an American state, Delaware, is number one on the list. And since being a tax haven is a magnet for investment, this is good news for U.S. competitiveness. The bad news is that American taxpayers are not allowed to benefit from many of Delaware’s “tax haven” policies. Here’s what a left-wing columnist in the United Kingdom wrote about the issue:

You’re a billionaire but you don’t want anyone, least of all the taxman, to know. What do you do? Head for a palm-fringed island paradise or a snow-covered Alpine micro-state? Wrong. The world’s most opaque jurisdictions – the ones that will best shield you and your cash from the light – are mostly in the heart of the most sophisticated and powerful global financial centres. London, Luxembourg and Zurich are in the top five most secretive jurisdictions, according the first comprehensive index of financial transparency ever compiled. Yet top of the pile, beating the British Virgin Islands, Belize or Liechtenstein as the best place to hide wealth, is Delaware. One of the smallest states in the US, it offers the best protection for anyone who does not want to disclose their identity as a beneficial owner of a company. That is one very good reason why the East Coast state hosts 50% of the US’s quoted firms and 650,000 companies – almost equivalent to one company per Delaware resident. …Delaware – the political power-base of the US vice-president, Joe Biden – offers high levels of banking secrecy and does not make details of trusts, company accounts and beneficial ownership a matter of public record. Delaware also allows companies to re-domicile within its borders with minimal disclosure, and allows the existence of privacy-enhancing “protected cell” or “segregated portfolio” companies, among many other stratagems useful for protecting the identity of those who do business there.

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